Revenues & Expenditures
Assets (items of value)
Liabilities (debts)
► Elements
of a good reporting system:
Understandability, Reliability, Relevance,
Timeliness, Consistency, and Comparability
Government Accounting
►
Focused on cash flows and transparency
Private sector accounting focused on profit and loss
►
Legal budgets
Budgets represent adopted appropriation law rather than a flexible plan
►
Debt & fixed assets are typically separated from operations Little fixed asset accounting before GASB 34
Difficult to value assets
Why do we need to?
►
Fund accounting
A set of accounts that record assets and liabilities related to a specific purpose (like a bank account)
Separate fund to account for each activity of a government
► Permits
► Permits
compliance with legal restrictions on cash flows administration of multiple operations
Types of Funds
► Governmental Funds
General funds
Special revenue funds
Debt service funds
Capital projects funds
► Proprietary Funds
Enterprise funds
Internal service funds
► Fiduciary Funds
Pension funds
Trust funds
Elements of the Accounting
System
► Procedures
and controls
Instructions for classifying, recording, and reporting transactions
► Source
documents for transactions
Receipts, invoices, original documentation
► Journals
Detailed listing of accumulated transactions
► Ledgers
Summary of account balances
Accounting Basis
► Cash
Revenue recorded when cash received
Expenditures recorded when cash gone
► Full
Accrual
Revenue posted when earned
Expenditures recorded when liability incurred
► Modified
Accrual
Revenue recorded when cash received
Expenditures recorded when liability incurred
What is a Budget?
► Projection
► Plan
of expenses and revenues
for the allocation of scarce resources
► Plan
for the provision of services translated into financial cost
► Prediction
of the likely operating conditions for the upcoming year
► Plan
for addressing those conditions
Purpose of the Budget
► Fiscal
discipline and control
Restraining expenditures to available financing Legal control / Legislative intent
(appropriations)
► Response
to strategic priorities
Ensure the highest priorities of the community are funded
How do we determine priorities?
► Efficient
operations
A tool for managerial control
A tool for evaluating operations
Components of the Budget
►
Budget Overview
What the government expect to do & how it expects to do it
Expected state of the economy
Program Highlights
Revenue & expense summaries
Other useful data
Financial Plan
Detailed lists of the costs with comparison data
Budget Classifications
► Functional
Broad purposes like education or defense
► Administrative
Agencies, departments, or divisions
► Economic
Types of expenditures
Major Categories
► Personnel,
supplies, services, and capital
Line items
► Salaries,
health Insurance, payroll taxes, …
Comparison Data
► The
final-report year (past)
► The
progress-report year (current)
► The
budget year (proposal)
► Out
years (future)
Results of the most recently completed year vs. the original budget
Progress for the current year vs. current year budget Should include previous vs. current year columns showing the change over time
Forecast of multiple years
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